Standard personal-finance advice is for parents to shut down the “family bank” once children are old enough to launch their own careers and families. Empty-nesters nearing retirement should focus on saving for their older years.

Good advice, but parents aren’t paying attention.

At least that’s the conclusion from a recent survey by money manager Merrill Lynch and demographic consultant Age Wave. Specifically, nearly 80 percent of parents surveyed continue to support their adult children to the tune of some $500 billion annually — twice what they are putting into retirement savings.

The authors of “The Financial Journey of Modern Parenting” clearly signal disapproval.

The question is, what’s wrong with turning to their children if they need to eventually? Is that really so bad? I can’t blame parents tapping into savings to spending on their kids and grandkids. I’m not convinced these generous empty-nesters are truly sacrificing their futures (minus the extreme cases).

The way I see it, what better way to spend savings than on children and grandchildren. Think about the emotional returns from setting money aside for grandchildren’s education. What parent doesn’t want to help their adult child get through a job loss or divorce?

I also think looking at living standards in the retirement years through the lens of savings is too narrow a focus. The evidence is overwhelming that families support one another. The American family has changed dramatically over the past half century, but that doesn’t mean the bonds of relationships are broken. Research convincingly shows that elders and their relations are engaged with one another.

When the Society of Actuaries researched the experiences of 85-plus individuals, mostly women and widowed, it found these elders were “comfortable with their finances.” They tend to be frugal. Most striking, their adult children help in a variety of ways, sometimes with money but often with shopping, household chores and other activities.

Older parents shouldn’t feel guilty lending financial support to their adult children if that’s how they want to spend their money (within limits).

That said, the family should realize that the money conversation is no longer about “personal finance” but “family finance.”

Conversations about savings and money and expectations is critical among family members. Aging parents should openly share their finances and estate plan with their adult children, and vice versa.

 

Farrell is senior economics contributor for “Marketplace” and commentator for Minnesota Public Radio.